Alstom board backs bid by General Electric

PARIS--The board of directors of French power-to-rail group Alstom on Saturday unanimously approved U.S. conglomerate General Electric's 12.35 billion euro (US$16.8 billion) bid to acquire its energy business.

“The board of directors unanimously decided to issue a favorable opinion of GE's offer” and will begin consultations with personnel, a statement said.

The statement came a day after the French government stepped firmly into the battle over its industrial jewel Alstom, saying it favored General Electric's bid over a rival joint offer from Germany's Siemens and Japan's Mitsubishi Heavy Industries.

GE boss Jeff Immelt hailed the deal, saying it was “good for France, GE and Alstom” while adding that it would not be finalized before next year.

His counterpart at Alstom, Patrick Kron called it a win-win-win situation, good for Alstom employees as well as GE and the French state.

The plan “seems to respond fully to the government's preoccupations of the government on energy and transport,” he said in comments published Sunday in the weekly Journal du Dimanche.

Kron added that he would see the GE transition was successfully “on the rails” before bowing out and letting a new team take charge at Alstom.

The French government announced a surprise caveat on Friday that it would take a 20-percent controlling stake to preserve French strategic interests in its industrial jewel, which it plans to do by purchasing two-thirds of the shares owned by another French group, Bouygues.

Discussions on the price were ongoing between the government and Bouygues on Saturday night after a long day of negotiations.

David Azema, who is leading the government negotiations, told AFP the two sides were close to finalizing a price on Saturday night.

The French government had wanted to buy the shares at the current price, which stood at 28 euros per share on Friday, according to the latest listing of Alstom on the Paris Bourse. But Bouygues was asking for 35 euros per share.

Economy Minister Arnaud Montebourg sought to reassure the French public on Saturday, saying the deal would cost taxpayers “zero euros.”

Montebourg said the money for the purchase would be raised from the sale of government-owned shares in other companies such as Safran and Airbus.

Transatlantic Tug of War

Even if the deal between the government and Bouygues is finalized, Alstom said it would still need to put the GE bid to employee representatives, and gain regulatory approval related to foreign investment rules.